UPDATE 1-Raj Rajaratnam brother charged with insider trading

Reuters Staff

2 Min Read

* Rengan Rajaratnam charged with fraud, conspiracy

* Older brother serving 11-year prison term

By Nate Raymond

NEW YORK, March 21 (Reuters) - A younger brother of Raj Rajaratnam was charged with insider trading on Thursday, nearly two years after the founder of the Galleon Group hedge fund was convicted of that crime.

Rengan Rajaratnam was a portfolio manager at Galleon, and the trades for which he was charged resulted in nearly $1.2 million of illegal profit, according to U.S. Attorney Preet Bharara in Manhattan, who announced the charges.

The charges are part of a broad government crackdown on insider trading. Since October 2009, 77 people have been charged by Bharara’s office in that probe, and 71 have been convicted.

Raj Rajaratnam received an 11-year prison sentence in October 2011 after a jury convicted him the previous May. He is appealing.

“Rengan Rajaratnam and his brother shared more than DNA,” Bharara said in a statement. “They also shared a penchant for insider trading.”

The U.S. Securities and Exchange Commission filed separate civil charges against Rengan Rajaratnam, whose full first name is Rajaregan.

A lawyer for Rengan Rajaratnam did not immediately respond to a request for comment.

The lawsuit alleged a broader scheme that netted $3 million in illicit gains for himself and hedge funds he managed following trades on stocks including Polycom Inc and Hilton Hotels.

Rengan Rajaratnam was charged with six counts of securities fraud and one count of conspiracy, and faces up to 20 years in prison on each of the fraud counts.

He has not been arrested. Rajaratnam is not in the United States and is believed to be in Brazil, a person familiar with the matter said.

The cases are U.S. v. Rajaratnam, U.S. District Court, Southern District of New York, No. 13-cr-00211; and SEC v. Rajaratnam in the same court, No. 13-01894.